Singaporean Fund Revs Up £2bn RAC Takeover

A Singaporean state fund is in secret talks to lead a £2bn-plus takeover of the RAC, a move that would end the prospect of a stock market listing of the famous roadside recovery business.

Sky News can reveal that the Government Investment Corporation of Singapore (GIC) is discussing with Carlyle, the RAC's existing owner, a deal that could be struck within days.

GIC is understood to have been interested in participating in a takeover of the RAC, which has 8.2 million members, for some time, having been enticed by the company's stable cashflows and growth prospects, according to a person close to the situation.

The precise structure of a deal had not been finalised on Tuesday, and it was unclear whether GIC wanted to buy the motoring organisation, whose heritage dates back to the late 19th Century, on its own or in conjunction with other investors.

CVC Capital Partners, the biggest shareholder in Formula One motor racing, is also understood to have expressed interest in buying the RAC.

An insider said it was possible that GIC would instead take a large minority stake in the RAC ahead of an initial public offering (IPO).

GIC, which manages assets worth tens of billions of pounds, is one of the world's largest sovereign wealth funds, and has become one of the most prolific Asian investors in the UK.

The fund was among a group of controversial so-called priority investors in Royal Mail when it was privatised almost a year ago, while it also owns shares in other listed UK companies such as SSP, the catering group.

Insiders said that RAC's board would meet in the coming days to decide whether to press the button on a stock market listing or pursue a sale.

The AA, its larger rival, reported half-year results on Tuesday which sent its shares up by 4%.

A flotation has been seen as the likeliest exit route for Carlyle, with more than a handful of investment banks lined up to lead a listing and a new board of heavyweight directors appointed last month.

Sky News revealed in August that Sir Mike Rake, the CBI president and chairman of BT Group, was to become the RAC's new chairman, replacing Rob Templeman, the prominent businessman who earned windfalls by turning around retailers including Debenhams and Homebase.

The RAC's chief executive is Chris Woodhouse, with whom Mr Templeman worked at Debenhams.

Aviva sold the RAC in 2011 to focus on its core insurance operations but was widely regarded to have undervalued the RAC by offloading it for £1bn.

Last November, the RAC paid its owners a £163m dividend, while the company made £142m in pre-tax profit last year, almost double its 2010 earnings.

The RAC and CVC declined to comment while GIC could not be reached.